A Voter's Guideby Charlie Cray, Special to CorpWatchOctober 22nd, 2010

The midterm elections are days away, but the winners are virtually certain: the corporations and conservative operatives like Karl Rove who have taken advantage of the Supreme Court’s Citizens United ruling to establish a well-heeled “shadow party” of networked trade associations and G.O.P. front groups.

Outspending Democratic-aligned groups by 7 to 1, these Republican-aligned groups have blitzed the nation's airwaves with wave after wave of ads. They have outlaid a staggering $300 million plus -- five times as much on congressional elections as they did on the 2006 midterms, the October 4 Washington Post reported. And “they are more secretive than ever about where that money is coming from.”

Even without the flood of funds, Republicans were expected to capitalize in this year’s midterm elections on widespread antipathy to congressional incumbents and progressives’ disappointment with Pres. Barack Obama. But the groundswell of independent conservative groups – many with huge war chests for broadcast and cable attack ads – has some predicting a much larger Republican margin of victory.

A poll conducted by SurveyUSA, an independent research firm, found that a majority of voters think they have a right to know who is paying for the explosion of anonymous election ads. But this majority – despite believing that the nameless groups behind the “independent” ads don't have Americans’ best interest in mind -- do not appear to be sufficiently outraged to spur structural reforms during the lame duck session that will follow the election. If Republicans retake the House, as most pollsters predict, other popular reforms such as public funding of elections will have little chance of passage, Thus it is likely that a key role in 2012 will continue to be played by corporate-funded front groups and, if recent charges are true, by foreign corporations and other interests alleged to be funneling campaign funds through the Chamber of Commerce and other groups.

The Citizens United Effect

The Supreme Court’s 5-4 ruling in Citizens United v. FEC – widely acknowledged as a radical departure from precedent – defined corporate campaign spending as Constitutionally protected free speech. The Jan. 21, 2010 ruling opened the floodgates for corporations, unions, and non-profit front groups wishing to keep their funders anonymous and to spend unlimited funds on political ads.

The decision to extend First Amendment rights for corporations was a clear victory for “business civil liberties,” but the Court majority, recognizing that “transparency enables the electorate to make informed decisions,” also advocated rapid and clear disclosure of political spending in the ruling. That stance rallied support for the DISCLOSE Act, a partial fix that would make third-party groups name their funders. While the bill passed the House, it met united Republican opposition in the Senate, and failed to pass before the election recess.

* 60 Plus Association: Formed by Jim Martin (“The Man Who Put the Death Tax on the Political Map”), a conservative operative associated with Richard Viguerie’s direct mail firm, 60 Plus bills itself as the “conservative alternative” to the AARP, amassing a $4 million war chest that it intends to use to target nine House Democrats.

* Alliance for America’s Future: Former Vice President Dick Cheney’s daughter Mary Cheney formed the 501(c)4, which was barred from running ads in Nevada because it refused to register in the state. Cheney formed another group -- Send Harry Packing – to pick up the slack. She also oversees the Partnership for America’s Future, a 527 group required to report its donors. Mary Cheney told CBS News’ Political Hotsheet that she believes there should be “full and immediate disclosure” of all campaign-related donations. The Partnership’s only donor? The Alliance for America’s Future, which doesn’t have to reveal its own donors. The three groups together will spend $12 to $15 million this year, according to Cheney.

* American Action Network and American Action Forum: AAN’s president is House GOP Whip Eric Cantor’s former chief of staff. The group’s corporate ties include Goldman Sachs, Wachovia, Home Depot, and several tobacco firms. Its board members include governors Haley Barbour, Jeb Bush, and Tom Ridge, plus various Republican ex-senators and congress members. Ex-senator Norm Coleman, who co-founded the group, explicitly cited the Citizens United decision as a reason for AAN’s “greatly enhanced” fundraising. The group is running attack ads against Sen. Patty Murray (D-WA), Sen. Russ Feingold (D-WI), and others. An ad against Feingold blames the senator for the country’s $9 trillion debt, an absurd claim given that the group’s backers are largely veterans of the Bush-era policies that produced most of the nation’s deficit. AAN leases space in its Washington office to American Crossroads.

* American Crossroads and Crossroads GPS: Karl Rove and former RNC chair Ed Gillespie formed the group in April, but quickly turned over day-to-day operations to Robert M. Duncan, a close Rove associate and a former RNC chair, along with Steven Law, a former general counsel to the U.S. Chamber of Commerce and onetime chief of staff to Sen. Mitch McConnell (R-KY). Back in July Rove was already crowing on Fox News that, because of Citizens United, donors who had “maxed out” contributions to the RNC could now give more to American Crossroads or Crossroads GPS. American Crossroads was running attack ads against Harry Reid in Nevada even before Sharron Angle’s (R-NV) campaign geared up. American Crossroads’ backers include Bob J. Perry ($7 million), a wealthy Texas homebuilder who backed the Swift Boat Veterans for Truth’s attacks on John Kerry in 2004, Bradley Wayne Hughes ($2.3 million), founder and chairman of Public Storage, and Joseph Craft ($2 million) a Tulsa-based coal mine owner.

* Americans for Job Security (AJS): Founded in 1997 with help from the American Insurance Association and the American Forest and Paper Association, the group has no “purpose other than to cover various money trails all over the country,” according to a report by the Alaska Public Offices Commission. The group openly praised the Citizens United decision as an “unequivocal victory.” In September the New York Times reported that AJS spent $6 million on ads during the primary season, concluding that its “deep ties” to Crossroads Media (a beltway Republican consulting operation also tied to Rove’s American Crossroads) made it “largely a funnel for anonymous donations.”Public Citizen calls AJS “one of the most egregious” violators of campaign finance laws.

* Americans for New Leadership and Liberty.com: Founded by Tea Party Activists Eric Odom and Yates Walker, the group has received strategic help from Republican activist Dick Morris. Walker, who is a consultant to Christine O’Donnell’s campaign for Delaware’s senate seat, told Politico that Citizens United “paved the way for the group’s formation.” He added that Liberty.com intends to “be a player for a long time,” evolving into the “right-wing version of MoveOn.org.”

* Americans for Prosperity (AfP): Chaired by billionaire right-wing industrialist David Koch, AfP’s president, Tim Phillips, is an associate of Ralph Reed, a lobbyist for Fortune 100 corporations, and the architect of various Astroturf campaigns. AfP played a key role in funding the Tea Party movement, and has 31 state-level operations. The group has fired off a variety of dubious propaganda salvos, including ads that blame the Obama administration’s stimulus plan for rising unemployment. A memo recently leaked to ThinkProgress.org reveals that Koch and a variety of corporate “investors” in the Republican Party met in June with Republican strategists, the U.S. Chamber of Commerce, Glenn Beck, and other conservatives to plot election strategy.

* American Future Fund: Formed by Iowa Republican operatives, the group expects to spend nearly $25 million on ads this year.

* Commission on Hope, Growth and Opportunity: Created by William B. Canfield, a Republican lawyer specializing in election law, the group expects to raise $25 million to help two dozen GOP candidates. Scott Reed, a veteran GOP operative who ran former Sen. Bob Dole’s (R-KS) 1996 presidential campaign, helped launch the 501(c)4. Reed told the Center for Public Integrity’s Peter Stone that “Citizens United opened the door for the unparalleled participation by corporations at the financial level.”

* Revere America: Founded by ex-Gov. George Pataki (R-NY), this 501(c)4 was formed to repeal the health care bill. It has spent well over $1 million in New York and New Hampshire races.

* The Club for Growth: Founded in 1999 by conservative economist Steve Moore and the Cato Institute’s Ed Crane, the group set up “Club for Growth Action.” After the Citizens United ruling, the independent expenditure committee announced that it would accept “unlimited individual and corporate contributions,” and aims to spend $24 million on this year’s election. The club’s former president, Pat Toomey, is running for Senate in Pennsylvania, and CfG is backing him in many ways.

* The First Amendment Alliance: A 527 “Super PAC” that People for the American Way reports is “a sham group for the energy industry whose office is a mailbox.” The group’s ads have been so misleading that one TV station pulled an ad targeting Jack Conway of Kentucky. Another energy-backed group is the Business Industry Political Action Committee (BIPAC), which receives funding from the American Petroleum Institute, ExxonMobil, and other oil, mining, and gas interests. BIPAC is expected to spend $6 million this year, and aims primarily to influence how the employees of its 400 member companies vote.

* U.S. Chamber of Commerce: According to U.S. Chamber Watch (a project of the Change to Win labor federation), the Chamber is the nation’s most powerful lobbying juggernaut, spending over $144 million in 2009 and using its “borderline thuggish” lobbying tactics (as one congressional aide described them to The Hill), to kill a variety of reforms, including the DISCLOSE Act. After Citizens United, Chamber President Tom Donahue opened the group’s doors to any member company that wanted to pay for anonymous attack ads. In October, U.S. Chamber Watch filed an IRS complaint charging the Chamber with illegally laundering more than $18 million from insurance giant AIG’s charitable foundation (run by former AIG CEO Hank Greenberg) through the Chamber’s political coffers.

The possible ramifications of disclosing controversial donations were made clear this summer in the wake of the Citizens United decision. A new Minnesota law mandating transparency forced Target (known for strong affirmative action policies) to disclose its $150,000 contribution to a business group that was backing an anti-gay gubernatorial candidate. The company was “flashmobbed” by gay rights groups and other progressive coalitions led by MoveOn.org. Target’s CEO responded with a quick apology to employees and a pledge to set up a review process to screen future contributions.

Since the Citizens United decision shareholders and groups such as the Washington, DC-based non-partisan Center for Political Accountability have convinced a growing number of companies to disclose or otherwise improve their political spending policies. Yet judging by the rapid growth of conservative non-profits that keep their donors anonymous, it seems many wealthy individuals and corporate executives learned a different lesson from Target's PR embarrassment: Don’t get caught.

Coordination Is Key

There are now more than a dozen Republican-leaning nonprofit front groups and trade associations giving cover to corporations that want to influence this year’s elections by funding political ads. The groups have amassed a war chest estimated at more than $300 million so far, enough to air more than 60,000 TV ads between August 1 and mid-October, according to Media Matters.

Although the web of associations among these groups is too dense to untangle completely, it is already clear that a powerful “shadow party” has emerged on the conservative right. It is poised to take credit for buying the midterm elections, and will presumably be a force to contend with in 2012.

Campaign reformers like Craig Holman of Public Citizen say that in addition to sharing office space and overlapping staff, the groups’ ability to collaborate is enhanced by weak FEC rules regarding coordination between the independent groups and campaigns. The Citizens United ruling is just one of a number of regulations and court decisions that effectively allow operatives like Karl Rove to raise and spend unprecedented amounts of money unrestrained by the restrictions that apply to party institutions such as the Republican National Committee.

“The RNC is a mess, and has no money on hand,” Mary Cheney explained to CBS news, which reported that Rove and others chose instead to coordinate their efforts through the “Weaver Terrace Group,” named after Rove’s home address in Washington, DC, where it first met in April. Members include Gillespie, Law, Barbour, Coleman, and other Republican rainmakers, including Fred Malek.

The Weaver Terrace Group has reportedly been convening weekly at Crossroads’ offices. Although American Crossroads is not allowed to coordinate directly with campaigns, as the RNC can, its ability to monitor ad buys gives it fairly easy – albeit indirect -- organizational clout without breaking the FEC’s rules.

“They can use the same ad buyers,” says Public Citizen's Holman, which means the campaigns and the independent groups can coordinate through a third consultant.

Democracy 21’s Fred Wertheimer, the “dean of campaign reform,” agrees that none of this coordination would be possible if not for weak FEC rules and lax enforcement. Democracy 21 filed an IRS complaint alleging that American Crossroads has violated its tax status by operating primarily in support or against candidates for office. But no one – including Wertheimer -- expects the issue to be resolved for years.

Public Citizen and three other groups filed a complaint with the FEC on October 13, charging Crossroads GPS with violating FEC rules by registering as a nonprofit 501(c)4 organization without registering as a political committee. But if the complaint doesn’t die in a deadlocked vote among the FEC commissioners, it will also take years to resolve–and certainly not affect the November election.

“Un-American Corporations”

Everyone who has examined the numbers agrees that labor and groups like MoveOn.org cannot possibly match pro-Republican spending, especially with rich liberals like George Soros largely sitting out the midterms. Without its own phalanx of outside groups Democrats, including Obama, have countered by attacking the secrecy of the groups’ donors and using the organizer-in-chief to try to mobilize young voters.

Even revelations that foreign interests may be funding campaigns have failed to trigger a large enough backlash to have much impact on the election outcome. In early October the Center for American Progress reported that the Chamber of Commerce was taking money from foreign corporations and effectively commingling it with domestic corporate contributions for election campaign activities. After Obama and Vice President Joe Biden repeated the charge, the Chamber insisted that none of the cash it admits receiving from foreign-based corporations was going into its ad campaigns. Yet, without full disclosure, there’s no way of knowing if that assertion is true.

Constitutional Amendment to Restrict Corporations

Many reformers remain convinced that the only way to fully address the problems created by the Citizens United decision is to pass a constitutional amendment restricting corporate participation in electoral politics. At least two coalitions, FreeSpeechforPeople.org and MovetoAmend.org, have formed to support an amendment, which is gathering broad support:

* Various members of Congress have endorsed the idea, including representatives Donna Edwards (D-MD), chair of the House Judiciary Committee John Conyers (D-MI), and senators Baucus, Dodd, Udall, Bennet and Specter.

* The vast majority of voters of all political affiliations are more likely to support candidates who favor a Constitutional amendment limiting corporate spending, according to a June poll for PFAW conducted by Hart Research Associates.

* A bipartisan group of more than 50 constitutional scholars and prominent attorneys – including former Massachusetts Attorney General Frank Bellotti and six other former state attorneys general-- recently issued a statement with the support of Voter Action and Free Speech for People urging Congress to consider a Constitutional amendment to overturn the Citizens United decision.

* In August, the National Baptist Convention passed a resolution calling for a constitutional amendment to overturn the Citizens United ruling.

Meanwhile, as Democratic party allies are scrambling to cut their losses with a last-minute get-out-the-vote ground war, they are already strategizing about what to do if Republicans win big, as most predictions suggest. Blaming secretive financing by the Chamber, American Crossroads, and other groups, Democrats may mount another effort to pass the DISCLOSE Act during the upcoming lame duck session of Congress.

But campaign reformers say even the DISCLOSE Act won’t be enough, and many are planning to push for public funding of elections (embodied in the Fair Elections Now Act), along other reforms.

The Campaign Finance Institute’s Michael Malbin and others say that reformers need to take a step back and rethink their approach. "The key to a successful public financing program is to realize that it has to be about creating incentives for broader participation," Malbin wrote in The American Interest. Rather than futile attempts to "drive private money out of politics," the solution, Malbin argues, is to tilt the balance of power away from wealthy campaign financiers by giving rebates and tax credits for small contributions, and by using matching donations to give voters increased leverage.

Still others think that meaningful reform must rest on a constitutional amendment to restrict corporations from unlimited spending on elections. (SEE Box: Constitutional Amendment) But unless the political landscape shifts radically, it seems unlikely that an amendment has any chance of passage in the next Congress -- especially if Republicans maintain a united front against reform.

"The Citizens United decision is just one of a string of decisions vastly enhancing the power of corporations to run our economy, government and lives," says Holman. "Citizens attempting to take back their country will require vigilance and a willingness to pit ideas and activism against corporate money."

Charlie Cray is a senior member of Greenpeace USA’s research unit. He is also director of the Center for Corporate Policy and co-author of “The People’s Business: Controlling Corporations and Restoring Democracy.”